PATTAYA, Thailand – Thailand is facing growing concerns over the rapid appreciation of its currency, with the baht recently strengthening to around 32 baht per U.S. dollar. Economic experts warn that this poses a serious threat to the country’s fragile economic recovery, as it undermines competitiveness in exports, tourism, and foreign investment.
Dr. Kobsak Pootrakool, Chairman of the Federation of Thai Capital Market Organizations (FETCO) and Executive Vice President of Bangkok Bank, said the recent baht surge is primarily driven by capital inflows into gold and emerging markets, as investors around the world shift away from dollar-based assets. This shift, dubbed the “Great Dollar Exodus”, is the result of growing concerns about U.S. political and economic instability, particularly under the influence of former President Donald Trump.
Kobsak explained that the U.S. Federal Reserve’s interest rate hikes have caused long-term U.S. bond yields to rise, attracting global funds temporarily. However, instability in the U.S. has made investors wary, leading them to seek alternatives like gold or emerging markets such as Thailand. The result has been a wave of capital inflows into the Thai bond and equity markets, as well as into gold investments, pushing the baht higher.
“The baht has strengthened so much that it is beginning to distort Thailand’s economic competitiveness,” Kobsak warned. “This hurts exports, tourism, and foreign direct investment. Policymakers must ensure that the baht does not appreciate beyond the levels of regional competitors.”
He noted that while the Thai baht is not the strongest currency in the region — the Indonesian rupiah and South Korean won have also appreciated — the level of capital inflow into Thailand is particularly high. The challenge for the government is to monitor this closely and remain flexible, especially as the economy remains fragile and inflation is relatively low.
Dr. Sethaput Suthiwartnarueput, Governor of the Bank of Thailand (BOT), echoed these concerns, confirming that the central bank is closely watching exchange rate volatility. While he emphasized that the BOT does not target a specific baht level, he acknowledged that the currency’s movements are being influenced by gold prices and the global shift away from the dollar.
Sethaput noted that while the BOT’s current monetary policy — holding the benchmark interest rate at 2.5% — remains appropriate, the bank is prepared to act if financial conditions deteriorate. “Our priority is to minimize volatility and ensure economic stability, not to maintain a fixed exchange rate,” he said.
Thailand’s economic model, which relies heavily on exports, tourism, and foreign investment, makes it particularly sensitive to currency movements. A stronger baht makes Thai goods and services more expensive for foreign buyers, discourages tourism, and increases the cost for foreign investors looking to do business in the country.
Market observers say the situation could worsen if the U.S. dollar continues to weaken, or if geopolitical tensions drive more investors toward safe-haven assets like gold, which in turn influences the baht. Experts urge the Thai government to prepare for a long-term shift in the global financial landscape, in which currency volatility becomes the new normal.
